Trader Sentiment Update During a TUMULTUOUS Month of May!

The month of May has been a tale of two stories, and two distinct moods from crypto traders. The month opened with traders being extremely panicked following weeks and weeks of dropping prices, including after the April 19th Bitcoin halving.

However, everything changed when Bloomberg's analysts got wind of the SEC suddenly having a change of heart and deciding to approve the first Ethereum Spot ETF's. Crypto-wide, we saw price explosions, including ETH itself jumping +20% in a single day, one of its best days of its 9-year history.

Prices soared between May 19th and 21st as traders reacted to the likely prospects of an asset other than Bitcoin finally being able to get exposure for traders who don't want to hold actual coins.

But even as the Ethereum ETF's were indeed approved yesterday, prices have been veering down across crypto once again. If you're confused by this, remember that this same "buy the rumor, sell the news" phenomenon occurred after the:

• Ethereum merge (September, 2022)
• Bitcoin ETF approvals (January, 2024)
• Bitcoin halving (March, 2024)

Time and time again, we see the real price boosts to these anticipated events happen BEFORE the actual event, once it becomes essentially a foregone conclusion. And then AFTER, there is typically a 1-2 week "letdown" period that causes traders to think... "why was this event so hyped? I thought prices would skyrocket now!"

When we look at crypto returns over the past month, through all of the ups and downs, we can see that it has been a fairly mixed bag for the top projects in the space. Ethereum is up, unsurprisingly, following its ascension in the week leading up to the ETF approvals. But Bitcoin is flat, and more than half of the top 100 market caps are down. PEPE and BONK are a few meme coins that have thrived through the chaos.

And when we look at the Trending Coins countdown, we see Ethereum remains far and away the project that is getting the highest increase in attention compared to its usual discussion rate. We expect that this will go down a bit now that the anticipated news has come to fruition, likely after the weekend when the casual traders give ETH its final cycle of hype after learning of the news.

Regarding the hype regarding the Ethereum ETF's, it's no surprise that all platforms began driving hype around it together. But Reddit and 4Chan appeared to have a leg up, getting a slight head start with huge spikes in discussion as soon as the rumors of the likely SEC approvals began back on May 19th. Twitter and Bitcointalk, interestingly, are the ones that seemed to drive the news on their platforms, a bit later.

And regarding sentiment itself, it should be no shock that there is legitimate euphoria surrounding Ethereum. We haven't seen this level of Ethereum bullishness coming from the crowd since 2021, the year it made its all-time high.

And as we frequently discuss at Santiment, markets typically move the opposite direction of the crowd's expectation. So as great as it is to see added Ethereum exposure being added into the mix through approved ETF's, the overwhelming narrative that this must mean prices should move up... means that prices are more likely to move down now, at least until the crowd hype diminishes a bit.

Overall, on the trader calls for "buy" vs. "sell" across social media platforms, we saw one of the highest calls for buying of 2024. As markets saw a mini retrace, resulting in BTC diving back down to $67K, there was a high interest in buying the dip. And usually, the true opportunities to buy dips occur when the crowd doesn't recognize them as such.

Finally, we end by looking at the overall narratives driving crypto. Bitcoin is being talked about less and less right now, obviously due to the crowd's shift in attention to Ethereum for the time being. Expect this to shift back after this weekend unless further significant news or price spikes occur toward ETH.

Terms like "Pizza Day", "ETF Flows", and even meme coins like PEPE are drawing some rising interest from the community.

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Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.